Dax Index News: Market Forecast Eyes ECB Rate Path as German Wholesale Prices Loom

DAX Strikes New All-Time High on Stimulus

On Monday, October 14, the DAX advanced by 0.69%, following a 0.85% gain from the previous session, closing at 19,508.

Market bets on 25-basis point ECB rate cuts in October and December drove demand for DAX-listed stocks.

China Policy and ECB Bets Boost Demand for DAX-listed Stocks

Military stocks were among the front runners. Rheinmetall AG rallied 2.20% after Leonardo announced plans to finalize its joint venture with the firm.

Tech stocks extended their gains from Friday, with Infineon Technologies and SAP advancing by 2.07% and 1.41%, respectively.

Investor sentiment toward China’s fiscal policy plans and expectations for ECB rate cuts boosted demand for DAX-listed stocks.

China Stimulus Offsets Weak Economic Data

On Saturday, China’s Ministry of Finance (MoF) announced fresh stimulus measures to boost the economy. Sentiment toward Saturday’s measures was mixed, with the MoF holding back from rolling out measures to boost private consumption. Nevertheless, the measures fueled demand for riskier assets as markets expect more stimulus later in the month.

Overall sentiment toward China’s fiscal policy plans limited the impact of China’s weak inflation and trade data. Notably, exports grew by just 2.4% year-on-year in September, down from an 8.7% rise in August, while imports were up by just 0.3%. China’s weak trade data aligns with September’s producer prices, suggesting a sharp drop in demand.

Experts Weigh in on ECB Rate Cut Expectations

While China’s stimulus was crucial, sentiment toward the ECB rate path also influenced risk sentiment.

Bloomberg Global Economist Nick Hallmark commented on the ECB rate path, stating,

“Since the Governing Council’s last meeting, members have been taking on an even more Dovish tone as concerns of inflation undershooting target have increased.”

German Wholesale Prices and Economic Sentiment in Focus

On Tuesday, wholesale prices and ZEW Economic Sentiment figures from Germany will draw investor interest.

Economists forecast wholesale prices to increase by 1.9% year-on-year in September after falling by 1.1% in August. A marked increase in wholesale prices may signal rising demand, potentially passing higher costs onto consumers. Hints of a pickup in inflation could temper bets on a December ECB rate cut, possibly impacting demand for DAX-listed stocks.

Meanwhile, improving sentiment toward the German economy may also lower expectations for December ECB rate cuts.

Better-than-expected figures could pull the DAX below 19,350. Conversely, weak stats could bolster bets on multiple Q4 2024 ECB rate cuts, potentially driving the DAX toward 19,750.

US Market Trends

On Monday, US equity markets continued their upward trend from Friday. The Nasdaq Composite Index and the S&P 500 advanced by 0.87% and 0.77%, respectively, while the Dow gained 0.47%.

Investor expectations for Fed rate cuts in November and December, alongside hopes for a soft US landing, drove demand for riskier assets.

US Consumer Inflation Expectations and the Fed Rate Path

On Tuesday, US consumer inflation expectations and the NY Empire State Manufacturing Index require consideration.

Economists expect the NY Empire State Manufacturing Index to drop from 11.5 in September to 2.3 in October. Avoiding the negative territory could support hopes for a soft US economic landing.

Meanwhile, consumer inflation expectations may affect private consumption trends and the Fed rate path. Consumers may halt spending if prices trend lower, dampening inflation and bets on multiple Q4 2024 Fed rate cuts.

Softer-than-expected consumer inflation expectations could drive the DAX toward 19,750. On the other hand, an unexpected increase may drag the DAX below 19,350.

 

Near-Term Outlook

In the days ahead, DAX trends will likely hinge on Euro area inflation-related data and the ECB monetary policy decision. Softer inflation and rising bets on October and December ECB rate cuts are crucial for the DAX at current levels.

Additionally, sentiment toward the Fed rate path is pivotal for a DAX move to new highs. A soft US economic landing and multiple Q4 2024 Fed rate cuts could drive the DAX higher. However, earnings also play a pivotal role.

On Tuesday, the DAX futures indicated a positive opening, with the DAX and the Nasdaq mini up by 11 and 72 points, respectively.

Investors should stay vigilant, with plenty of drivers influencing the appetite for DAX-listed stocks. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

The DAX hovers comfortably above the 50-day and 200-day EMAs, affirming bullish price signals.

A break above October 14’s all-time high of 15,518 could signal a move toward 15,750. Furthermore, a breakout from 19,750 may bring the 20,000 level into play.

Investors should consider China stimulus updates, the data from Germany and the US, and central bank commentary, which may influence near-term market sentiment.

Conversely, a break below 19,350 could signal a fall toward 19,000.

The 14-day RSI at 65.21 suggests a move to 19,750 before entering overbought territory.